MMO Income – Part 1 – Planning

Making Money in the Auction House

First this is NOT about making REAL money by playing video games. If you were hoping to fund a new video card, you’re out of luck. If you were hoping to start a gold selling service, please logout of the Internet and never return.

What I did want to share is some general tips and tricks about how to make the most out of an in-game market place, commonly called by players (and some game developers), the Auction House (AH). The tips I’m going to share here should apply to most games as there are some general themes to how these things work.

Sidebar – It’s not an Auction

A minor pet peeve of mine (which I mostly get over) is that technically it isn’t an auction. In an auction (like eBay or Meekum) people bid on an item for sale and the person who bids highest wins. What most games have is more akin to a consignment shop. You sell stuff you found (or made) for a set price and you get the money (minus a commission).

Buying and Selling 101

You’ve heard the great advice, right? “Buy low. Sell high.” Seems like a great idea, and sound advice. But what is “low” and what is “high”? In an active, fluid marketplace how can I tell if the price I can buy an item for is a good value? Or what the best price is to sell the item at?

Sorry to say, but if you’re going to play this part of the game, you’re going to need to do some work on your own. I have a spreadsheet that I use to track prices on items that I typically buy and sell. The sheet tracks trends, calculates statistics, and figures out based on what I expect to sell something for, what price I should buy it at to achieve my goals.

Sidebar – Market Watch Sites

Some games have market watching sites. So, you may be thinking, I don’t need a spreadsheet, there’s this other site that shows what things are worth! Well, not so fast. Any sampling of an MMO market is a “point in time” sample. For items which rotate through the AH quickly, they may be missing a lot of data. Also, you don’t really know how they’re reporting that. Is it an average? Is it just the latest data point? Items tend to change in value to the players as changes in the game systems occur; so trusting that site which is providing an “average value” from the last year may be foolish. Track your own!

Whenever I decide to get into a new market niche, I try to give myself at least 10-20 days of just gathering data until I’m confident in my numbers. If there’s a significant change in the game, I will even zero things out and act like I don’t know anything to see how the market fluctuates.

As a “reward” for reading my guide, I’ll offer a simplified version of what I’m talking about in my next post to the blog. The spreadsheet needs it’s own explanation. J

Failure to Plan…

“Goals?” you ask. “Isn’t the goal to make as much as I can?”

Well, sure. But there are multiple ways to do that. Most games have those handful of high-end “endgame” items that sell for millions of coin. However those are rare, and you’re probably going to be competing with people who have large pocket books for those. At the other end are the “newbie” items which are common to find, but you’re going to make barely (if any) profit on them.

I typically start by setting a profit margin goal. In my case, I use 30%. If I’m not going to make 30% on my purchase, it isn’t worth it to me.

But, that doesn’t mean that I look for something selling for 70% of my target selling price. I also need to account for the fact that the AH is keeping their commission. In my current game (The Secret World), that commission is 15%.

So, to get the REAL buying price, I need to look for something that is 100 – 15 – 30 = 100 – 45 = 55% of my target selling price. As you might imagine, that’s going to significantly limit my target purchases. I’m basically looking for someone who just wants to make a little bit more than selling to an NPC vendor.

Sidenote – Below Vendor!

In every game I’ve played, there are always people who don’t know the floor on the prices they set. I’ve seen time and time again where people post items in the AH for less than what the vendor would have given them if they’d just sold it as “vendor trash”. The reason this happens is that when most people are selling on the AH, they undercut whatever the lowest price is. In TSW, if you hover over an item, it will tell you the vendor price for it. People STILL routinely sell certain things for less than that. I don’t worry about margins in those cases, I will buy even if I only make 2 coins since it’s guaranteed profit.

So, now I’ve told you that you need to gather data and have a plan. But what should you be targeting?

Target Market

I typically look to make profit in three specific areas of a market. These are reliable coin makers. They aren’t going to be the big ticket things, so I don’t normally hit a huge profit. However, in TSW, I average around 1 million coin per day profit. That’s for about 30 minutes of “work” on the Auction house and it’s steady income not relying on loot tables or RNG.

Sub-Endgame Gear

When it comes to buying and selling gear, I tend to target the non-endgame stuff. Endgame gear (mostly desired by raiders and PvP players) is well known and has a lot of market competition. The interesting thing is that those same endgame players tend to see the lesser gear as “trash” and will dump it on the market without a lot of concern.

Let’s say the level cap on your game is 50 levels. If you target gear for level 40-48, you’re going to find a few things. First, the demand is higher. In most games players don’t always make it to the level cap, but they almost always get close. Even if a player caps one character, it’s not uncommon for them to start another to play while they wait for their guild’s Raid Night. Since their endgame character has deep pockets, they’ll fund these alt characters pretty well.

Sidenote – Know your game. In WoW for instance, PvP is tiered every 10 levels. So PvP players will often target an x9 character (19, 29, 39, etc.) for PvP purposes. You may be able to make really good profit with lower level gear just by knowing some things about where the min/max players will try to optimize.

Crafted Items

If you’re going to be a crafter (I love that part of MMOs by the way), then you need to really learn the markets. One category of items that is almost always in demand is consumables (typically food and potions). With their “one time use”, and constant demand, it can be easy to make a lot of coin in this way. The more “accessible” (aka “easier”) crafting is to get into, however, the harder this market becomes. So tread lightly here.

Crafting Materials

This one is VERY game specific. In TSW, crafting materials are created by deconstructing existing items. In most games, materials are gathered from the field. In the case of TSW, I’ve done the analysis to know what prices I’ll pay for different tiers of “Green” (low-quality) gear so that I can break them down into materials and make very steady profit selling them on the AH.

Convertible Materials

I love this category! In both WoW and TSW, I have made a TON of coin by simply knowing that crafting materials can be improved (or degraded). Let me give a quick example using TSW.

In TSW, the highest quality crafting materials are “Sacred” followed by “Pure”. TSW allows me to convert 5 Sacred materials into one Pure material. I can also deconstruct one Pure material into 4 Sacred ones. So, consider the two scenarios:

Scenario 1: Upgraded Dust

Sacred Dust : 1500
Pure Dust : 14000

In this example, if I buy 5 Sacred Dust for 1500, I will have paid 7500 coin for them. But I can convert them (for no additional cost) into one Pure Dust, which sells for 14000. My “buy cost” for Pure Dust would be 14000 * 0.55 = 7700; so buying the Sacred Dust, converting it, and selling it as Pure Dust meets my profit goals.

Scenario 2: Downgraded Fire

Sacred Fire : 2000
Pure Fire : 4000

In this example, I can buy the Pure Fire for 4000, downgrade it to 4 Sacred Fire. This gives me a cost per Sacred Fire of 1000 coin, a bit below my buy price of 2000 * 0.55 = 1100 coin. However, in this case I really need to know my market. Sacred Fire might not be a big seller. Sure there may be plenty listed on the AH, but I need to pay attention to whether it sells or not.

Vanity Items

Oh we gamers are surely vain things! Depending on the game this may be clothing or furniture for in-game housing or dye packs to change the color of your gear. Many vanity items drop randomly. A player who isn’t into this sort of thing may not realize the value of the pink shirt that he just got from a mob. But you’re tracking the data; so you DO know. Snatch it up for 1000 coins, sell it for 5000 and profit!

Sidebar – Above the Vendor?

One of the funniest things to me in WoW was that, because I liked to explore, I knew where I could buy a frilly “pirate shirt” looking thing from a clothing vendor. As I recall, the cost was like 10 silver. However, I could routine sell 2 or 3 of those every week on the AH for 50 silver because people were too lazy to go find where they could buy it on their own.

Wrap-up for Part 1

So in this installment, I’ve talked about knowing your market and setting a goal for yourself. I’m planning a couple more posts on this topic. In the next one I’ll share a version of my spreadsheet and explain it. I also have a post planned talking about how timing of your purchases and sales plays into it. And I’ll wrap up a 4-part series with some other little tips and tricks I’ve learned along the way.

I hope this whets your appetite to come back and read some more. Feel free to post questions and comments, I’ll answer as I’m able to.